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In the end of 2010, Obama extend Bush-era tax cuts for two more years. That decision made government lost almost 900 billion dollar revenue. Two weeks ago Obama still claimed that he would only benefit families with income of $250,000 and lower. All of a certain he changed his mind and cut tax for those millionaires and wave about $700 billion dollars tax for the wealthy. His decision surprised even members from his party.

Bush’s tax cuts were set up in 2001 before 9.11 happened. U.S treasury had a surplus and America’s economic was running well at that time. Most of the tax cut is benefiting the wealthy. It makes the top tax rate drop from 70% to 35%. People doubt Bush’s motivation and believed that the huge U.S treasury deficit we have today is relating to that. Bush knows what he did that for. He hoped people didn’t call that as Bush’s tax-cut. If he believes that is a great deal he would like that named Bush forever and let the history remember him.

In the last two years Obama’s administration brings the U.S treasury deficit up to 1.4 trillion dollars and 57% of them are hold by foreign investors. Obama knows it clearly that the trajectory of his spending could not be covered by the incomes with tax-cut. Why did he still pass the bill? Because the party representing the wealthy wouldn’t co-operate unless he put the jobless people back to work and reform the welfare system. Obama choose do nothing but made two deals: cut $700 billion tax for the wealthy and extend jobless aid to 13 months. He said he did that is for the people who put him into the president position. Obama proofs to the public that how lazy he is. Maybe that is by born. I don’t know if you notice that sometime he even doesn’t want to straight his neck instead he raises his chin. I mean by birth he prefers to live in a relax way.

What does Obama expects for his two deals? (Again Bush doesn’t want the tax-cut bill named on him anymore) Of course he hopes jobs are being created. He believes more money in the market means more consumption occurs and more consumption means more jobs being created. Can he full feel his dream? The answer is no! Today, our businesses are holding almost 2 trillion dollars and making no investment. Just GE has 200 to 300 billion dollars cash and doesn’t what to do. They might buy or sell stocks in the market and they don’t bother to create jobs. They don’t like the poor have to spend their last dollar. They will spend what they usually spend and will not make extra consumption. That means funds from the tax-cut will be saved well in somewhere.
When Bush made the tax-cut in 2001 many businesses were still in the United States. The age of free trade was just started then. Cutting tax might more or less solve the investment and hiring problems. Today our businesses have labors work for them in over sea. If the Chinese currency RMB is too high to bring in profit for them they can move to Vietnam, India and Cambodia. Why do they bother to pay for high salary, high health insurance for the American here? Government has right to make them pay tax but have no right to force them to create jobs. Of course they salvo when they heard that Obama gave up the right of taxing. People who get $250,000 or above salary usually have power in their companies and maybe they used their power to set up their salary rate such as the CEOs of the banks. Obama is veyr folly to cut their tax. They will cover their mouth to laught and without saying thank you.

Obama hope jobs come back when the market has money. I have to point out things clearly here: high stock index, high consumption index and high economic index don’t mean that jobs will be created. Obama has to do real works to bring the unemployment rate down and he has to plan it very carefully. His plans relate high speed rail and green revolution cannot efficiently create jobs at all. Thirty billion dollars investment in high speed railroad plus the maintainence fee and deficitt in long term the budget is big. So much money create only 170 thousand jobs is not good enough comparing with 15 million jobs we need in the market.

In this article I explain why making tax-cut is folly and why it will not help jobs back as what we explect. At this kind of financial situation our government should increase the wealthy’s tax and put people back to work. Making tax-cut is folly and Obama accept the deal is because he is lazy and naivy. He hopes he put the money in the market and the market will creat jobs automatically. I don’t know when he will be wake up.
I accusing Obama not take action doesn’t mean that I don’t know the difficulty of cutting government’s expenses. It might cause riot like what happen in the Europe. Next article I will discuss about how to cut the welfare and put the poor to work. Today, 60% of government’s expense is using for social security, Medicare, Medicaid and welfare service. The wealthy’s complains make sence. Without a real reform on it we can go nowhere.